The Business of Watches [002] Sylvain Berneron On His Company’s Work Philosophy, Business Structure, And Future Watches

30:21Sylvain Berneron:But I wonder, it's interesting. I mean, obviously, you've gone out on your own to do a smaller volume, higher value, unique product. Did you ever aspire or consider continuing to move up the ranks in the corporate world, the corporate watch world, do you think you could run a large industrial watch manufacturer, established brand, and do different things with it? So, multilayered question. My initial goal was to climb up the ranks. In my corporate career, I went as far as a chief product officer at Breitling. I had a team of 60 people handling movement development, casing development, product strategy, product design, prototyping, split it across three different locations, values, group, ages, and genders, all of the things.

31:23I think once you manage that type of scale, you can manage a few hundreds, if not a few thousands. I'm not sure if it's very different.

31:31Sylvain Berneron:Do you think it is possible to make compelling, interesting, high-quality product in that? Coming back to your initial question, my initial goal was to climb up the ranks until I would be in a position to make the decisions. Right. Until I realized that even although I was effectively chief product officer, I had very little impact on the BQs. the truth is and it sounds very silly the people who make decisions are the ones who pay the money at Breitling the shareholders make the decisions not me because it's not my business it's not my company it took me 15 years to understand so once I understood it very clearly this is when I decided to go on my own because I was like look at rather have my hands free and make small decisions on my own rather than having to beg somebody to take bigger, braver decisions.

32:29So that's why I decided to leave. I like to believe that I could, of course, lead a bigger structure to braver decisions. The people like Mr. Hayek Sr. or Mr. Beaver are a great example on how people can become industry captain leaders. And then, for example, Mr. Hayek Sr. was a visionary. He's the guy who found the industry sitting on its back and flipped it upside down and then get it back moving again. It requires not only to be brave, but to have a vision and to have also these guys had a good understanding of people. And this is a factor. For example, at BMW, this is where I picked up this culture.

33:17There is a deep and profound respect of each people expertise and each people as individuals. And you can feel it. I was 19 and I felt it.

33:31Sylvain Berneron:You felt respected and valued as an employee. You have this very Germanic way of reminding you that you are Mr. 19 intern. and so you should not be too, too proud because this is obviously not your success. But if you are here because you own the badge, then you are one of us and we will teach you. That was so liberating and so encouraging and so aspiring as well for the young guys that I was. And although I'm no longer working in the car industry, I'm trying to keep that culture here at Berneuron. to make sure everybody has a perspective in his job, has the right tools, feels listened, feels encouraged to go one step further and do something or perform at a level that they would not even consider if they were not backed up by the company.

34:30Sylvain Berneron:How do you, though, what is your proposition, though, to attract people to come and work for you? You say it's brutal. You haven't had a proper holiday in five years. You've made huge sacrifices. It's still a very small team. What is your pitch to attract people? So the non-weekends, non-holidays rhythm is my own and only privilege. no one in this company except me had to work during weekends or had no holidays and stuff like this technically it's not true because Hugo and I worked over a weekend during watches and wonders but he did recover these days later on I am extremely strict on that because I think if you're not able from the get-go to to print a good rhythm there is very little chance that you will find it back on the way.

35:28So I don't even want to start with this. But my proposal is the following. On one hand, the people we hire are people that are very good at what they do. So most of the time, the complexity of our product is something that speaks to them. It's sort of the next level, if you want. So whether you're a watchmaker, an engineer, a sales guy, logistics, design, communication, you get, I don't like this phrasing, you get the chance, it's not a chance, but you get the opportunity to work on the top of the food chain in terms of product. That's one thing which is in itself quite motivating for most people.

36:13But second, I've also worked in the corporate structure itself. So what makes Berneron SA, regardless of the watchmaking, very different from other companies is we've implemented two main rules. The first one is we run what I call a responsible salary grid, which means we have a public salary grid in the company, which has a multiple of three between the lowest and the highest salary. Everybody in the company knows this grid. It's composed of eight layers. So the two first layer, S1, S2, you are what we call a collaborateur, which means an employee with a beginning set of skills. You are S1, S2.

36:58Then if you climb up S3, S4, you are considered an expert. So you're somebody with minimum five years of experience, really in deep possession of valuable skills, which is the core, I should say, of our industry. people who have tremendous dexterity, understanding of mechanics, patience. And we forget that way too often. Then if you climb up one step, then you get into always a little bit more problems, as I say. So if you go five, six, then you end up in management positions. So if you are salary five or six in your company, you at least manage one person. And then seven, eight is a director's position.

37:45So you handle at least multiple people. You are responsible of one part of the P &L for the company. And if something goes south, you'll be one of the people that I will be extremely mad at.

38:00Sylvain Berneron:You bear some responsibility indeed. So that's the salary grid. The numbers are public. Meaning what, the numbers are public? Everybody in the company knows who is where on the grid and it's all fine. Do they know their actual salary or they know the percentage? They know if they are S1, S2, S3, which number they are. They know how much they make because the salary S1 goes with one number, etc. So it's transparent in that way and there's no... And you could think that it would be problematic, but all of a sudden when people know that there is... If you're at the bottom, you know that the top guy makes three times what you make.

38:41And that is swallowable for anybody. because you go like, wait, this guy works twice as long as I do. He has probably 10 times the problems. It's fair if he makes three times what I make when I can go home and just forget about it. So that's cool. When you go in big companies and you see people living at noon and you know they make 100 times what you make, this is not cool. And I am Gen Y. I think Gen Z following us is even more aware of this. and they haven't even started that they had enough of this shit. So that's one point, the salary grid, with the multiple of three. So if one day I wake up one morning and I go, oh, wait, I've worked very hard, I'd like to make more money, I raise my salary, and I have to bring the salaries, the bottom salaries up to respect my rule of three.

39:37Sylvain Berneron:Fair enough. I win, everybody wins. So that incentivizes everyone in terms of output in that composition. But there are other ways that people can participate as well. Yes, exactly. And I'm coming to it. And so that mentality that I picked up comes from the military. I'm from a military family. And something I've been told is if you want to have a group of people operating, doing something very complicated, very risky, very dangerous, they have to bond together. It's the only way you can do this. How do you get, well, that's interesting. So, yeah, I mean, I would agree with that. And, you know, sometimes things like the military or sports teams do something called hazing, which is put people through terrible experiences together.

40:28Sylvain Berneron:Exactly. To bond them. Yeah, and it's when your life is threatened that you start to behave and that when you start taking responsibility, because trust me, if you put 10 guys in the desert, with a limited amount of resources to do something very difficult, you cannot mess around. And the word of mouth all of a sudden has tremendous value that you can turn your back and that guy ain't going to shoot you or drop you like a stone when you leave. Same, and the military comparison is a bit violent, but same applies to build cathedral, for example. You have stonemasons, wood guys, painters, the guy who make the windows, etc.

41:08You bring the best people, they bond together around one objective, and this is how you achieve great things. And the corporate world, in my opinion, has completely broken that, the modern one, because you enter as a young guy and the promise you get is work your ass off so that we, management, can make the money. It won't last for very long, in my opinion. So that's why we have the responsible salary grid. and also after three years of being in the company everybody has access to the capital of Berneuron SA, the corporate structure, from 0.2 % up to 6 % depending on the salary grid that I mentioned.

41:53So if you are S1, you come out of watchmaking school, you come in our company, you will make S1 salary and after three years you will have the option I won't give it to you you'll have to pay for it to acquire 0.2 % of the company and the way this is set up in order to be fair is that the price is locked from start to finish which means if you come in 15 years the price of 0.2 % will be the same as today for one reason because if we don't lock it down in 10 years the shares will be simply unaccessible to normal people because the value of the company increases. If things go well. It will. Or will die trying, at least.

42:41But let me touch wood for a second. Indeed. Here it is. So the value is

42:50Sylvain Berneron:the valuation. The valuation is locked and people will say, wait, how did you do that? It's a fairy tale. No. We actually have a tax deal with the Canton of Neuchâtel to lock the price of the shares of this company through two conditions. One, you cannot walk away with it. So if you lose your job or if you quit this company, your shares will go back in the main pool so that these shares can be given to the next guy. Otherwise, that will dilute the capital of the company and it will no longer exist. And the following guys will lose this opportunity. So second, your shares are tight. But do you buy them back?

43:31Sylvain Berneron:Yeah. I buy them back. Yeah, you buy them back. Yeah, because the price is not me, the company. The company buys them back. So you basically recover the money you've given. But the money you've placed in the company through these shares, I always insist in so that people had to pay because I wanted them to feel at a lower scale the sacrifice I had to do. I don't want to give dividends to people who haven't paid even a single buck. I want you to put down on the table 30, 50, 60 Gs just so that you feel it, the commitment. And all of a sudden, it means something to you. And it is a great investment because with the projections we have, you recover that investment the first year.

44:12And then it pays almost double, triple every year. So because you own the shares of a company and you get the straight dividends of your work. So if you are S1, you have 0.2%. If you are a director, you have 6 % of the business, and it goes in between depending on your salary.

44:30Sylvain Berneron:And then the payout for that or the monetization for that equity interest is through the dividends then? Exactly. Which are linked to... So every employee becomes then a shareholder in the sense that he or she has a fixed salary of 13 months. And then the year after, so in March, once we've closed the P &L of the company, declared the taxes, we do pay dividend, we allocate, I don't know, I put an example, it's not, these are far from being true numbers, but let's, I wish it would be, but it's not. Let's say we have 10 millions of dividends that we want to split. Let's imagine the company made 10 million a year.

45:14The way this will work is the following. You have the people and you have the company. The people take five out of the 10. Out of these five, we split it between each of us, but I want five to remain in the company so that the company can have the oxygen to still develop new calibers and buy machines, etc. And this vision, I explain it to my guys all the time, that the company is not here with us. In French, we call it a personne morale, which means a legal entity, but we have to consider it. It is a living entity which needs money and needs time and needs all these things. It's to be fed and watered.

45:52Yeah, which is why people ask me, oh, you don't have kids yet? Sometimes I laugh and I say, yes, I have a five-year-old struggling business.

46:00Sylvain Berneron:It's like raising a kid, frankly. But I'm fascinated how planned and structured that all is. I mean, how many employees do you have right now? It's still quite small. From a legal perspective, we are nine, but we are only six in the surface. We have two more people coming, and that's nine with me. I don't include myself in the workforce because legally I am not. For an anecdote, I should also mention to anybody who wants to build a business. For example, when I rent it, when I say brutal, I'll give you two examples. I signed a paper to rent at Surface. It is a commercial structure, which means the lease is a decade, 10 years.

46:44You cannot compress it. and it says, Responsible Berneron S.A., Co-Legal Responsible Mr. Sylvain Berneron. Which means if my company goes under, they will come and knock on my door to say, you still need to pay the lease, my friend. And then I brought this paper on the table to show to Marie-Elix and I was like, look, this is serious business. And she was like, oh, you're sure, blah, blah, blah. Can't you go around it? And I'm like, well, I'm afraid I have to do what I have to do. But if it goes under, we'll have a very, very big flat. to live in. So that was one brutal example. And it wears on you, right?

47:22Because when I don't think about it every day, but when you go to sleep, you're alone with yourself, you remember, you're like, shit, I signed that cut down paper. And I have to pay these 10 years of lease regardless of how many watches I will sell. That's one example. Second example, even more insulting, we've contracted an insurance as every rigorous company should do in case people get heavily injured. If somebody has a stroke or the sort of life heavens that none of us want to think about but if it happens our company will be able for two years after the incident to provide to the employee 80 % of the salary.

48:06This is I think from an American perspective for you guys it's like ovni level, like irrealistic level, but in Switzerland these kind of things exist. We took it, very costly. Insurance excluded me from that contract.

48:25Sylvain Berneron:Okay. You are not covered if you... I am not and it says on the paper black and white for Berneron SR blah blah blah this insurance at the exclusion of Mr. Silvan. So not only I get to pay and I don't even get to get the service. It's insane. And that sort of treatment as an entrepreneur is thrown at your face very often. Indeed. We're proud to have Panerai supporting the business of watches. For this episode, we're spotlighting the new PAM01574, a Luminor GMT power reserve in a sleek 44mm black ceramic case. It features a sandwich dial, dual-time functionality, a 3-day power reserve, and Panerai's new click-release strap system for easy swaps.

49:21Sylvain Berneron:This reference represents Panerai's forward-thinking approach to its Luminor collection, combining heritage, high-tech materials, and bold design. And it's just the beginning. Expect more exciting Luminor launches throughout 2025. Alongside the depths of time, a historical showcase taking place this October at Casa Panerai Madison in New York City, and this November at Panerai Miami Design District Boutique. Experience never-before-seen archival pieces and exciting novelties up close. Learn more at Panerai.com or check the show notes. Thanks again to Panerai for their support of the business of watches.

50:07Sylvain Berneron:Now back to our chat with Sylvain Berneron. I want to talk about, you know, obviously you have done a lot of planning in terms of your, all of this business plan. How many employees you're going to have by this point? How the compensation will be structured? And then in particular, production and the size of your production. Obviously, with the success of your first watch, the Mirage, you could sell a lot. How many, you know, remind us how many you're making, how many you've sold, and tell me why you just don't make a whole bunch more. because you could probably sell them. So starting from top to bottom, last year we've delivered 48 watches, 48 Mirage, to our clients as we committed on.

51:02Delivering in time is for me fundamental because it's part of the reputation of the brand. We have a launch sequence which is crafted very carefully where we will launch one product per year, every year for a sequence of 12 years. That's the first chapter of the brand. Going further than that would be too dreamy, I think. So that's what we locked in, in terms of numbers, in terms of people, in terms of logistics, etc. We formulated a strong and reliable hypothesis around that scenario. Every year, when we launched a new product, we increased the annual production by 50 pieces due to the addition of this new product.

51:51Sylvain Berneron:Right, so there's 50 of each new product each year. We make two references, so it's technically 24, 24 of each. And why I say 50 and not 48? Because every time I keep two pieces in stock for after sales, etc. But from an industrial perspective, I ramp up by 50 pieces every year my manufacturing capability or sales or order book grows by 50 pieces, etc. I've been called short-sighted or small thinking with that. Currently, we have an order book full for the next three years on the four references we have for sale. So the entirety of our portfolio is sold out for the next three years. do not give up however anybody who wants to be part of this feel free to send us an email because Hugo will take your contacts and we will inform people who are on the waiting list before we even release something publicly we try our absolute best to offer good familial cordial service to everybody who wants to interact with us but coming back on the manufacturing side why 50 per year?

53:05first because in 12 years I will go up to 12 times 50 is at 600 pieces so I will be north of 600 pieces which for an independent brand is no small feat in comparison François-Paul Joon to the last numbers I've heard is making 900 mechanical watches per year

53:26Sylvain Berneron:I've heard the same number you know MB &F 400 maybe So that would place Berneron in a decade amongst the solid pillars of the independent watch scene. But that's not even the goal, because as you mentioned, the traction we had this year, I could have pushed 200 pieces out of the door, they would have said, no problem. So why not? Yes, why not? There is one reason for that. Next year, we will deliver the Mirage 34, so second chapter, another 50 pieces. If something goes wrong, let's imagine, because when you're an entrepreneur, you are on your own, which means you have to double-check yourself all the time because no one else will do it for you.

54:16So I'm always thinking I've been very fearless in terms of creativity, but very cautious in terms of setting up the infrastructure because I don't want to play with these things. It's people's lives and families and stuff, so I don't want to do something stupid. So let's imagine the worst scenario. We forgotten something. It goes wrong and the 50 watches, they will break after we deliver them. Worst case scenario, all of them.

54:44Sylvain Berneron:Nightmare. Nightmare, indeed. But controlled nightmare because I know I have to ship these 50 watches back to me. And on average, if you take the two weeks of Christmas and you're off, I have one watch to fix per week. it will be tough we will sweat, we will cry but we can still manage I can tell to my guys we f***ed it a big time now we have to take responsibility we will take turns we will fix these things, ship them back we can still manage if you make that mistake and you push 200, 300 watches out of the door you're dead in the water because you will be effectively submerged by a wave of aftersales that will prevent you from manufacturing what you have to deliver this year and you create what we call a huge cash hole in your operations where you end up fixing stuff you invoiced year minus one and that stops you from invoicing year zero you're currently in you're dead you're dead and i surely do not have a mattress of 20 30 50 million laying somewhere so that I can swallow that kind of thing.

55:55Sylvain Berneron:And then the other question then, speaking of mattresses and people with the ability to swallow them, I presume you've been approached by persons interested in investing in this business, outsiders. Talk about that and what do you say? So, we are regularly approached whether from, you have two types. You have the romantics like me, so that's collectors who truly come from a place of care and want to help us by offering sometimes tremendous means. And I always tell them, look, if you want to help us, your support through taking one of our allocations is frankly the best you can do. your patience, your understanding if something goes wrong is what we need as a support.

56:53And keep in mind that effectively, because if you take an allocation from us, let's imagine now you want a Mirage for 2028, Hugo will send you an allocation proposal and to transform that allocation will require from you to pay a 50 % deposit three years ahead, which is already in itself a huge commitment from our clientele to us to make these watches i revert back to the cathedral comparison that i make it is the most sincere and admirable form of commitment that you can do to to tell to somebody here is my money i give it to you now and i give you three years on top to make the amazing things that you said you would do It creates even a bond that when we have collectors who visit us here now, I've heard it twice now, and it always moves me very deeply.

57:51They go like, oh, I'm so happy to see where my money went. And it moves me very deeply because I take great care into spending that money very carefully into stuff that makes sense, that we create more jobs, have a positive impact on the region around us and the industry, etc. So it is very cool. I think I've moved away from your initial question.

58:18Sylvain Berneron:Well, I mean, you've explained that the way you're generating cash flow, obviously, and funding things is through those deposits. It's one of the ways. But you were talking about the investors. Indeed. Why not have you been approached by brands, entities? Tell me what you can, who and why. Is that something you would consider in the future, taking on an outside investor? So we had collectors, as I said. We said, if you need anything, a few millions, a few this, a few that, talk to my friend, I can get you that money. I was like, no, thank you. We had family offices from mainly Asia and UAE. That's interesting, looking for alternative assets, kind of investments.

59:09They come and say, look, we are willing, through a strategy of diversification, to allocate you 10, 15, 20, 25, 30 millions of Swiss francs. Keep in mind, I think this is attractive for that kind of family offices because Switzerland is one of the most stable countries when it comes to politics and fluctuation of money, of currency. Yes. And then you have the hopper level, which are private equity firms. Three of them contacted us. One of them is well-known. I should not mention because I think it would be... And giving problematic information. But the biggest envelope we've been offered is 90 million three francs.

59:58Sylvain Berneron:Wow. That sounds like a payday. Yeah. Yes and no. Because with it comes the pressure and the expectations. And me no longer have my say into how and when we do things. And let's not forget that I had endless resources at my disposal just over two, three years ago at Brightling. We had hundreds of millions. We could do whatever the F we wanted. Sure. We just decided not to. Why? Because when you have so much money on the table, you don't want to lose it. so if I sacrifice five years of my life delay five years of gratification with my marriage, my hobbies my potential family to end up in a place where I put again a ton of money on the table which stops me from taking my own decision but on top I'm linked to this with my own skin and my own family and it would be the worst decision of my life and I explained it to these guys I was like look freedom and risk-taking is what I'm after.

1:01:11So if you're willing to give me, and that's what I told them, if you're willing to give me 90 million and let me play with it, then we can have a discussion. If you want to give me 90 million to type me to my desk and tell me what to do, then we can't have that discussion. No way. And of course, guess what? Do you know anybody on earth who will give you 90 meal to play with no so that discussion ended quite quickly interesting and they were like because obviously they try to to convince you and and and and to to make it happen no but you you you still have uh you still retain uh you still make the decisions blah blah blah and i quickly give them examples like how about uh i want to make uh this weird idea uh and i'll ask you to spend five mil up front.

1:02:03And they would be like, yeah, we would have to see a business plan and maybe to link it to another book or something. And I'm like, no, you don't understand. I'm telling you to spend the money three years before the world even knows about it. And this is where most people move out of the equation. We are about to release a very complex annual calendar in September this year. I've started to develop this movement two years ago, right when we launched the first Mirage. And the suppliers were telling me, Sylvain, don't you want to wait to see how the first one plays out so that you can adjust? And I told them, no, these are two different projects.

1:02:43They have their own merits on their own. I want to move them in parallel because I want to keep the narrative alive. This is also something that has to be considered. And it's probably the hardest part for me is how to make sure I surround myself as a business owner to have people that I can trust to handle the growing side of the operation so that I can stay clear-minded on the vision for this company. This is so hard to achieve because every day the business drags you down because that guy didn't deliver, that bill is missing. You know, the air conditioning is not working today. That's probably why the audience hears a few tooling noises in the background.

1:03:30We are currently fixing the air conditioning in the surface. And that's the daily operations of any small structure, which is heavily distracting to build the business further.

1:03:42Sylvain Berneron:So is the business aspect simply a necessary evil? Or do you find as a designer, as an entrepreneur, as an intelligent, driven person, does the business part and success at that and innovation in that, does that not motivate you as well, though? The daily business is very important because it's basically making a lot of small but important decisions. Yes. it sounds silly you're the decision maker obviously yes and I'm very well surrounded so my guys they know which decisions they can make and which one they can't I give you a simple stupid rule each watch that comes out of the workshop I want to have it in my hands and see it I take it I flip it back up I'm not the one doing the quality control by any means because I do not have the time neither the skills for that matter in which we operate.

1:04:42But I see every watch that leaves out of that workshop. When it comes to monetary decisions, Hugo and Fabien can make decisions up to a certain bag, envelope of cash. And we align very often the management of this company to make sure that we build a company culture. And we call it bon sens in French, which means you should handle this company like if it was your own family. You spend the money like if it's the farmer's way, frankly. An egg is an egg and you don't just drop it or forget it. You make sure you make good use of it. So this is what we try to do. It sounds all very simple. It is much harder to achieve than that because every day you get distracted, things get delayed.

1:05:29The human factor is also very hard because building long-lasting relationships is no small feat. As a brand, I'm trying to develop a good sense of hospitality towards our clients, but also, and don't take offense if you're a collector at Berne Rond, sometimes even more towards the employees, the hospitality. I want the people who come and work here to feel good, to know that if they are sick, if they need to escape, for family reasons, blah, blah, blah, they can do it and they are in a safe space because only when you have that backing, you can then go and take a risk in your own discipline.

1:06:10Sylvain Berneron:So let me ask you, from your perspective now, maybe it was different when you started, but what are you building here? Is it a company? Is it a watchmaker? Is it a brand? It's not a brand. I'd like to believe that it is first a team. I like the human aspect of things and I keep telling to my guys if you ever want to leave let me know I'll help you to take your next job and what I miss the most is your presence in the company it's not your time or your skills or whatever. I've been working for 15 years now in various companies and when I look back what I remember the most is not the projects, not how many we sold how much we failed, blah blah blah it's the people that I did it with for me at least this is crystal clear i remember the guys who put me in huge trouble threw me under the bus when they had the chance and i remember the guys who i sweated hard with and and we overcame the challenges that's what i'm trying to replicate here and funnily enough the good experiences are often linked with good product and with good success but it's a it's a consequence of it.

1:07:31So if by chasing a commercial success, you believe that being an asshole is a good excuse, I think you're gravely mistaking the path to take, in my opinion. I think good product, good company reputation is the bottom line of a well top line executed set of values and well planned operations strategy.

1:07:59Sylvain Berneron:But I mean, when you're running a business and you are the primary investor here and you've talked to, you've invested over a million francs of your savings. Sometimes I forget. Into this. Thank you for reminding me. Money that you had saved over your corporate career. Sometimes you have to make tough decisions. You have to let people go or you have to tell a supplier that what they have delivered is not good enough and you're not going to pay for it. I mean, how are you balancing that part of it? It's not just creating a bond with a great team and having a success. I think the best way to describe how we work is to give you a few examples.

1:08:48So as you said, I've invested a million three francs with two installments of 500 ,000 splitted across a year in this company. That was four or five years ago now, which frankly was all the money I had, all of it. Even had to ask my wife the permission to do this because we've been married for a few years and she is entitled not to decide what I do with my money, but at least you know that I'm not planning to spending, for example, in a common real estate project or something. Sure. So we had that discussion. Thank God she agreed. Now, Pernod SR still owns me that money. I don't want to, I could take the money out.

1:09:32I don't because I want to give as much oxygen to this infrastructure as I can. So I leave my money in. It has no interest. So it's not like I'm buying interest or something, none even. It's like free given money on the side. And if we were to go down at some point, which will happen, I'm ready to dance in the rain because one problem will happen, whether it will be tariffs, it will be war, it will be market collapse. I have no idea. We have ways to go through. One is, by the way we operate, keep in mind I have zero stock. The watches that I manufacture have been allocated in advance. That in itself is already a huge safety.

1:10:20because I don't reduce stuff that has no client in front of it. Huge safety. Second, if something was to go wrong, I would reunite anybody or everybody around the table, remember who has kids, who doesn't, blah, blah, blah, and I would offer the team to find a solution, depending on everybody's needs, to adjust their salary temporarily so that we can go through and we don't have to fire people. Again, very old school way. If you are in the mountains, you have supply, limited supply of water or something, you split it across the age group, the gender and who is more thirsty. That's common good sense.

1:11:04So I would be super happy to do that. I can't force it on anybody from a legal perspective, but if people would agree. And I think when these times come, people show often very good solidarity. I like to believe in the positive nature of humankind. I don't know anybody who takes pleasure in letting somebody else's stuff. It doesn't exist. So I would try to solve it this way. If we have a problem, we can also go to suppliers and say, look, I'm having a cash hold. Can we delay some payments? Right now, for the record, we do the opposite. it i'm paying in advance some suppliers to help them okay yeah because of the current sort of state of the uh of the industry indeed so i've been helping already some suppliers cash wise and the last thing like you said when it comes so that's fixing a problem and also fixing a problem is sometimes being extremely firm on our positions quality for example is an endless fight so you can have this year last year receive 100 wheels which are perfectly finished and up to the tolerances etc you reorder the same order one to one and this year for some reason the person changed or the goal was not as good or whatever the quality is not there and I'm ruthless in this case I do not we have a quality procedure whether it is in and it's okay or if it's not and it goes back and i'm sorry and i say it in the most polite manner that i can with the most compassion etc but there is no and sometimes suppliers try because for them it's dry loss keep in mind it's like what do i do with these wheels i want send so of course they try to push you and make you feel guilty etc and i tell them I crack a joke and I tell them again if you're willing to come with me to the collector and explain him or her why the watch is not precise or why it keeps breaking because you didn't want to redo the wheels then I can accept these wheels and often they say oh no I let you do that part and I say then I can't take the wheels I'm sorry

1:13:32Sylvain Berneron:interesting and so you've you've had to have at least one of those conversations yeah two this year two this year already two this year already yeah And it's not pleasant, but we always try to find a dignifying way to do it. It's not about judging somebody and then trying to cut heads. It's also something in the corporate structure. At Richemont sometimes, I won't give names or brands, but I found the attitude of solving problems by putting the responsibility on one person and to make him or her pay the price of everybody's mistake, very unfair. We are a company. We are a team. If there is a failure, it's everybody's problem.

1:14:18It's not his or her because he or she forgot. Yeah, well, maybe he or she forgot because you've been an ass with him or her 15 minutes later. Or maybe he or she has a sick kid or something. It's more complicated than that. And if every time when someone makes a mistake, we strew that guy under the bus to say, you f***ed up now, you pay. You send the message to everybody around, oh, if I make a mistake, my head's going to be chopped off as well.

1:14:49Sylvain Berneron:And it makes people fearful and too careful and they don't… And they don't perform the way they could. and it's hard it's very hard very very hard to sort of because I'm an individual as well and I'm trying to sort of represent Bernard as the person moral the moral structure and that moral structure not me I'm a very I can be I can show a lot of anger sometimes I'm very impulsive that's my creative side speaking so I have my downsides, like everybody and then Hugo and Fabien know how to counterbalance me very well, which is why it works between us. But I'm trying to represent the moral structure to be the bigger guy.

1:15:39So if the company has to lose money because I don't know, somebody forgot, or we broke this or broke that, then the company will lose money, it's fine. What I don't want to lose is the reputation of the company.

1:15:52Sylvain Berneron:When you, maybe before as you were planning this venture or perhaps during and now, who have you looked to for inspiration or instruction? I mean, are there models or blueprints you're following, whether it be in the watch industry? I mean, obviously, I think MB &F and what Max has done is I see certain similarities in where you're trying to go. and obviously there are some successful independent watchmakers here who have built significant businesses. Or have you looked outside for both business and creative inspiration and guidance? Yes, of course. That's another topic, but I think creativity, for example, is never x-nilo.

1:16:44I think true creativity is actually a mix of various inspirations that you've gathered together and which you reiterate in your own formula. But coming back, this business is inspired by, I would say, three main fields. First is my education, my family. As I said, I come from an old school military family. For the anecdote, when my dad learned, because I didn't tell him, I decided to quit my job to make a watch brand. My brother told him, we always work like this. It's a rebound structure, right? I never say something to my dad. My brother tell him, and if my brother does something, I tell to my dad.

1:17:24This is the way we work. Okay. Always been like this. It's a bit weird, but this is how it works. So my dad calls me and says, I hear you're making a what, Brian, right?

1:17:35Sylvain Berneron:Yeah, yeah, sure. Tell me a little bit about it, blah, blah, blah. And at the end, he goes like, and I hear you're using your family name on the dial. Is that right? He's like, yes. He's like, may I ask why? I was like, well, it's my family name. What else do you want me to do? He was like, I'm not questioning. He said, I'm not arguing with your choice. I just simply want to remember you that it's not only your family name. And that was the end of the discussion. It didn't go further. That was enough to just, you know. So I take it very seriously. A gentle reminder. Yeah, and that part of the influence is basically the farmer way or the good sense, you know, the father providing for his family sort of the good care.

1:18:25That influenced me deeply here sometimes to take irrational decisions just because I think from a human side of things, they make more sense. I will gladly drop a bag of money if I can keep my values intact and then walk proudly Sunday afternoon at the local market because I know I didn't break a family revenue stream just to hit my mark on the Excel sheet. That's first thing, human values first and foremost. Second, in terms of performance, you have a lot of guys that you can find on the internet like Simon Sinek, Gary Steinfeld, or I don't remember exactly his name. You will find a lot of, and if you enter these two streams, you will rebound through multiple entrepreneurship podcasts and you find common traits that come back.

1:19:19Sacrifice, delayed gratification, believing.

1:19:24Sylvain Berneron:Does that mean staying positive or is it different? Believing. But the hard part is the following. It's like making something new requires a lot of courage, which is why it's risky. But being stupid is also very risky. And that's the whole challenge of this. It's like you have to evaluate the risk. Am I being brave or am I being stupid? All the time. And then the more efficient your business is, the closer you are to the brave side, but also the closer you are to the sun, to the stupid side of things. Because I'm sorry, making from ex-Nilo a gold, full gold bent watch, including a bent gold movement in it in small series with no financial backing is a very stupid idea.

1:20:21from the risk-taking perspective it is very stupid but it is at peak between brave and stupid and and due to the reception it received at least for this bet i'm happy to report that he was obviously on the brave side of things more than the stupid one but and the problem is if you lose and you cross the line just one meter too far you lose big time i could have lost my millions that I invested, I could have had these watches made, be the laughingstock of not only the local industry, I would have savaged my existing professional reputation, which was for me a concern, right? I had a good position at Breitling.

1:21:05Should I risk it all to potentially lose it all? So yes, that's the risk, the taking risks side of things. But coming back to your question, I said my family, I said the entrepreneur culture as whole that you can find on YouTube, on all the various platforms, even the books. You can read a few books, The Infinite Game, Simon Sinek, and other books that I remember, which were the seven characteristics of people who generally achieve what they begin with. And again, whether it is sports, entrepreneurship, any other projects that you want to tackle, they are common traits. and most of the time it is having a vision, gathering the resources to do it, coming up with a plan, executing the plan.

1:21:55And the hardest parts for me, for example, are patience and staying committed. Me, for example, when I commit to something and it starts to go south or to shift into something else, this is often where I struggle to not pull the plug or to readjust too quickly. And this is when, for example, Fabien and Hugo helped me a great deal because they are engineers and they have business educations and they can quiet my creative fire, which is my worst enemy because I come up with the ideas, but it diminishes me in the war side of things. When it's tough, I tend to escape the trenches. When Fabien and Hugo say, look, Silva, we committed, we signed now.

1:22:45You stay until the end to see how it unfolds.

1:22:49Sylvain Berneron:Interesting. And they have to tight me on my chair and close my eyes. And is there anyone or a company in the watch industry that you take inspiration from or that you see as a model in some ways of how to do things? I'm happy to report that Max Emilian Busser, we see each other every year. He had the grace to share his experience with me, to give me advice. I'm a good friend with Simon Brett, with Xevdet Rechapi, Rechep Rechapi, Gaël and Flo of Peterman Beda. the indie space has that decency and that, because we've all sweated very hard to grow our own businesses. And it's funny because once you've passed that point, you find people that are truly deeply kind.

1:23:48We are not competing in any way.

1:23:51Sylvain Berneron:Here's one another. It's interesting. I mean, there are only a certain number of collectors that can afford this level of price for a watch. Are you not competing with them for the same risk? Frankly, not the way that I see it, because if you would talk to Max, for example, he would tell you that he's fighting against himself. He wants to challenge himself to go higher and to move his product higher, and so do I. Me, I received a strong artistic education. the challenge for me is to achieve a strong level of personal endangerment through creativity. This is through art, by the way. When I hear people telling me, oh, the art of watchmaking because you did guillot on the part, this is not art.

1:24:40It's called craftsmanship. It's very different. So I'd like to rectify that art can be achieved through dancing, sculpting, singing, architecture, whatever, drawing. And it's the act of putting yourself in danger for the sake of the artistic act. Yes. That's art. Nothing else is. If you're a good dancer, you practice the craft of dancing. That's not art. The art is putting yourself out in front of 500 people to perform that act. That is art. And the problem with art, as my mother taught me, is all you can do is perform that act. The feedback is out of your hands. The way people will react is out of your control.

1:25:27And this is where is the personal endangerment and this is where is the value of the complete operation. If you're trying to control the output, you're no longer doing art. And if you're no longer doing art, people will likely don't care anymore. Because if I was to play a song or to sing something that I know you will already like, it's not very exciting for me, and it's probably very boring for you because it means you've seen it already.

1:25:56Sylvain Berneron:But it still might make me feel nice. Yeah, yeah, yeah, yeah. But that is interesting. I mean, so if making art is literally putting yourself in some kind of danger for artistic expression, is business, can business be art? Yeah, I would agree. I would argue that there is the art of business the same way that there is the art of war, definitely. And that, for example, I can tell you that the risks that I've taken in front of some of our suppliers, which warned me from a very kind place of mine. they told me sylvan this is professional suicide i don't believe in it please reconsider i don't want you to get hurt blah blah blah and i said you know what i appreciate your concern i truly do i take it as a hug but i will do it anyway here's my money please trust and and then trust the process trust the process yeah they did the components although they were not believing in it just for me and now I come a year later and I order more and stuff.

1:27:12And that created a form of respect, a bond, the true meaningful relationship and a will for them also, because the suppliers are deeply rooted in the industrial landscape. So most of the time creativity is not there, right? For them it's not in creativity is there because they constantly refine the processes and find ways to do better things, but not in the race-taking levels that we do on the product side, like for example, like Max. And I don't want to speak too much under his name, but I'm sure that Maximilian is not trying to fight with anybody. He's fighting with himself. When you see the urological machines and stuff, he's trying to move people, push himself forward.

1:28:06I'm trying to do the same. The result outside, I would almost be sad to hear that my product takes sales away from other people. And if that happens, I would even be willing to help one day. If that would happen, somebody would come and say, oh, you launched this and I went bankrupt because of it. I would be like, look, here is some cash. Maybe we can work it out. I'm truly not trying to offense or to attack anybody. We're just a group of guys bonding together through the exercise of making the best object we possibly can. How much do you believe, I mean, what would be the most satisfying outcome for you that, you know, you end up achieving great financial success and you are comfortable for life

1:28:56Sylvain Berneron:and potentially you're the generation afterwards? words, or that you create, you know, art that you think achieves the level of artistic expression that you've been trying to achieve? Or are you going through an exercise here to demonstrate that art can be a commercially viable endeavor? Because I think about, you know, when you talk about your family background and your father was a tech engineer, your mother was an artist. Correct me if I'm wrong, but she didn't, you know, did she make money as an artist? No. No, no. My mother had a job. She was an amateur painter, had a deep sense of art, but at her period, it was not considered a career path to be a painter.

1:29:53But coming back on what would be the best outcome on the long run. First and foremost, what I'm interested in is the moral structure that I told you about. My dream would be that Bernard SR would be a structure which, on one hand, provides employment, good salaries, fulfilling jobs, for God's sake. It's not about just the paycheck. in a local business structure, which we can also supply jobs for suppliers around us. So we become a true, deeply rooted local economic player, which has long lasting and honorable relationships with this supply network. So that would be my dream, a company with a good reputation that plays a decent economic role in its region.

1:30:53That for me as a business owner would be true success. I'd like that company to be strong enough so that the people who work in it have a balanced life. They can have families, they can have hobbies. For example, we have employees are entitled to take five additional weeks of unpaid holidays if they want to pair it with the existing five weeks of paid holidays. If you want to do, I don't know, cycling trip, visit your cousin in Australia to do whatever. Life is not only about work.

1:31:29Sylvain Berneron:That's a nice benefit. And trying to do these things because I'm deeply convinced that if people show up to work, feeling safe, feeling fulfilled, to do something they want to do, You get rid of all the BS of clocking your times, having to check if people did the work well or not, blah, blah, blah. People come here because they want to. And that's the most efficient way for everybody to do it. I didn't set up a business to have to be a nanny of 12 adults. I'm not interested. Not at all.

1:32:05So the moral person, so being a good actor in the canton is one thing. Provide jobs, so playing a role in the economic landscape as well. Making amazing products. That's, I would say, in the global scheme of things, I'll give you a counter example. On my deathbed, I would not be pleased to have achieved the best watches if I smoked everybody on the path to achieve that. I would not be fulfilled with that. I would even say it's the opposite, that rather if I had to choose, thank God I didn't have to sacrifice until now and I'm not planning to, but if you would push me against the wall and say, quality of the conditions for your people or quality of the product, I would choose the people.

1:32:53I'm sorry. Because I'd rather quietly close this company and to keep my values intact rather than having to cross that line and become a monster just to make money. Not interested. And I do not have a set of hobbies expensive enough to have to do these things, right? I'm not in the pursuit of having a collection of Ferraris or whatever. I don't need that. I would be very proud if I can make one of the best watches in the world in a way which I hope could be an example used, especially by Gen Z, to show them and say, look, there is a different way to do it. You do not have to sell your soul to the massive corporations.

1:33:41There is another way.

1:33:42Sylvain Berneron:I mean, you know, last thing, because we've been chatting for a while. Do you think that great artistic expression, great product, that if we think that watches can be an art or can be art, can that come out of what exists as the traditional Swiss watchmaking corporate environment? Yes, I think it does. And it remembers me a discussion. I had it a few years ago with a journalist. She was not from the watchmaking industry. She came from a more global information society newspaper. And she gave me a kick sort of saying, oh, Mr. Bergeron, you seem to be a decent individual. May I ask, why do you use your brain for such a sterile and surfacing endeavor?

1:34:38Like what you do is completely useless. Luxury is not needed. the world needs bright minds like yours to solve problems, real problems, not the shitty, sparkly things that you're making. And I remember I took offense on that day because as a matter, as a designer, I spent a lot of time thinking about it. Yes, making jewelry, because it's effectively, it would be naive to think that we are making useful tools these days, is no longer the case, it's jewelry, is useless, absolutely useless. We are not solving starvation, not solving conflicts, not solving environment problems, etc., etc. But these objects use very little resources in terms of volume, very little resources.

1:35:31A mirage is 55 grams of gold, so it's not the end of the world. Although these 50 grams have been leveraged through 400 hours of combined skilled labor, that labor is paid, generates salaries, revenues, tax income. When we sell the watches also generates tax income, which reverts back to the economy and makes the society run. So I told to that girl because she was a bit hippie, like it can be sometimes, like, you know, like luxury is useless. I was like, if I sell a$100 ,000 watch,$20 ,000 goes in the pocket of the government, which you can build a bus stop or stuff like, let's not forget that.

1:36:19Like, luxury is not the devil, at least not the way I'm doing it with highly paid labor in Switzerland, with people who actually like their jobs. and we as a human society have to find a way to occupy people and if the future of humanity is making jewelry which doesn't hurt anybody and makes the tax roll payment efficient, I think it's not a bad way to end, is it? Like, yeah, I don't solve starvation, but maybe the millions of tax revenue and VATs that all production will generate will effectively solve some of the starvation, so by rebound. So I think it would be a deep mistake to try to make people who have the means feel guilty of buying luxury for that reason.

1:37:18Because I'm not saying you save the world, but you certainly not damage it by doing it.

1:37:23Sylvain Berneron:I think you make a fair argument indeed. and it can certainly bring people pleasure, interest, engagement with beautiful artistic arts. So to answer your question, I think art and watchmaking and craftsmanship, I see it as a true way forward for human society and the watch industry and the luxury industry. And as a fact, that's also probably why this industry has been quite stable over the years. It's not, if you compare, for example, to the modern car industry, which is on the verge of a massive transition, jewelry, on the other hand, has been stable since centuries. Even before we make watches, we used to make crowns and necklaces and neck braces and stuff.

1:38:11Sylvain Berneron:So it's interesting, I mean, coming back to that sort of structure, that business structure, I mean, it sounds to me, though, that obviously you think that outside shareholders are not conducive to running the best watchmaking business and that private or company-owned entities are the best at that. You know, where do you think, I mean, we're talking about watches. What do you think of Rolex? and what role they exist? Because when you talk about existing in a society, I mean, obviously, they play quite a role in Geneva and Switzerland. Few people know the full extent of Rolex. Like, from a business standpoint, Rolex no longer makes money with watches.

1:38:59They make money with buildings. We have that common saying in the canton of Geneva that a third of the real estate of the canton is owned by Rolex. which I believe is to be true. Let's not forget they have the Hans Wilsner Foundation, which to my knowledge pays back to the community north of 150 million Swiss francs per year.

1:39:23Sylvain Berneron:I think more. 3, 400. Yeah, okay, that's mega. I think that has to be admired. In terms of business, it is a vastly different set of operations. you have the two formulas either you do high quality low volume or you do higher volume lower quality I'm not saying Rolex watches are not qualitative for the volume they operate they are at the highest issue of quality which you can operate at that volume let's keep that in mind now let's not pretend by any means that a Rolex watch can rival with a high end independent watch in terms of craftsmanship by any means simply because it's a matter of number of hours of labors combined in one product it has nothing to do with who makes what or whatever.

1:40:21Sylvain Berneron:But I mean how much does the structure of it being a trust foundation inform what that entity is in terms of its role in society and I'm just wondering they provide

1:40:38I mean, to be transparent, I declined twice to work at Rolex. And it was back in the day, now she retired. It was Maria Cristina Calvani. She was the head of creation. I declined twice because, and it was a matter of perspective, as we discussed earlier. The perspective she offered me was, you join us, creative team at Rolex. For two years, you won't do anything because I need to wait until your blood gets green. she said. And after two years, you slowly start making hands and dies and stuff. Frankly, I had too much creative fire in me to even dare with that sort of perspective. I think Rolex is, the main difference between what I do and what they do is one, the scale of the operation, of course, the magnitude for the record Rolex produces in 30 minutes what I produce in a year.

1:41:29yep so there is no comparison whatsoever and the second is the risk-averse side of things rolex is an extremely calculated well sought out risk-averse operation probably because they have a million watches to move a year a few thousand employees on their payroll and i cannot blame them for that. So you really have the two sides of the coin. We are the pirates, as Jean-Frédéric used to call us. And I'm very happy to be a pirate.

1:42:02Sylvain Berneron:I'm a happy pirate. But I mean, you know, I guess the question is, what I'm trying to get at is that, you know, what will the structure of this, if the business plan hands out? Where will you go? And what will the structure look like? Would you take on an investor, a strategic investor like MB &F has with Chanel or Journe has done. I mean, yeah. It's too early to say. To me, the best, I'd be happier to split the investment across four or five families that are integrated into the business. For example, Hugo's family, Fabien's family. We gather three, four families together a bit closer like AP has it.

1:42:46They had the Piguet and the Audemars family. so a few families linked together. I think it is very important to have skin in the game in the sense that the people who have the money are in the business every day. My biggest enemy is detached shareholders, people who gather the benefits, although they do not work in the company.

1:43:07Sylvain Berneron:Exactly. Because you come every year and you demand from a structure benefits and you don't know that structure because you haven't worked in it. And I think this is what drives modern corporations in a very wrong path, in my opinion, because of course the shareholders, they paid a lot, so they want more benefits. I understand that. But if you haven't spent a single day in the business, how could you possibly understand the needs of that same structure? And I think you have to have the two sides of the cone in order to make enlightened decisions. And so we know that you're going to do your, you're calling it an annual calendar, a complete calendar?

1:43:49Sylvain Berneron:Annual calendar. Annual calendar. And we've seen, you know, some of what that will look like. And then how far down the line, you know, and I know you've got another watch, you know, basically planned out after that. How far down the line product development-wise are you, if we talk about that 12-year plan to get to 600? We have the recipe and the cost structure, the cost objective planned until 2035. Each year, I know I want to make, that's the recipe of the watch. I do not have the design. You don't have the idea. Locked in yet, but I know the recipe of the watch. I can already tell you. So this year, 2025, we launch, we kick off our second collection, which is called Cantiem, through an annual calendar, which is a Cantiem annuelle.

1:44:41That will be the start of the second pillar within the brand, which is our second collection, more traditional, more technical, the equivalent of what is a Kalatrava collection in the Batek portfolio, for example. And in two years, we will launch a third collection, which will be named Fiasco, and is centered around jewelry concepts that I've been wanting to work on for a decade already. So it still will be a collection of watches, but centered around modern unisex jewelry.

1:45:16Sylvain Berneron:Can I just stop you there, but then continue with the plan? But why Fiasco, which is a great Italian word? Fiasco means a big mess, effectively. when you see the watch, you'll understand. It is, I should not say too much, but the goal of that collection will be to allow the wearer to display the two sides of a person. I think we, both of us have two sides. There is the professional Andy, the Andy who behaves, who is well anchored in the world. and we all have the crazy Andy, the one who is full-on passionate in his hobbies, who is probably singing, dancing. I have no idea. All of us have these two sides, thank God.

1:46:11And I'd like to capture that through an object which allows you to display. You know, in Batman, you have this character, I think it's Harvey Dent with the two double faces. I'd like to work on that topic. I already know how it looks, etc. But the problem with this project is it's another movement again, very complex. And I need a bulk of cash like no other to be able to do this tone setting, like the cash involved, this message. This is also why, for example, we've planned the launch sequence also according to the financial needs linked to it. So there is a sequence going crescendo in terms of cash needs, which is why I started with the Mirage, which technically is a three-hand watch.

1:47:01Then the Cantier is a complicated watch. So the Cantier Manual, the movement has 476 components, which is three times more components than the Mirage. So I would not have had the cash to start with the Cantier collection. and the fiasco is even worse because you had watchmaking, precious metal, plus stones and you blow the financial counter. And so will basically

1:47:25Sylvain Berneron:the watches keep getting more expensive and valuable? Is that the path? Not necessarily. At the end, I want to operate in a field between 50 and 250 ,000 three francs. That's the goal for the company. I do not want to go higher than 250 because most of the time these watches are simply packed with what I would call unnecessary things. But that's only my vision. I fully understood that some people like to spend five million on a full iced out watch. I'm not judging anybody, but for me, 250 is well enough. And under 50, due to the small nature of our manufacturing, the extensive use of precious metal, the skilled labor that I mentioned, etc.

1:48:16I frankly struggle to have a competitive offer under 50. That's the harsh truth, it hurts to say.

1:48:27Sylvain Berneron:Let's talk about pricing. And this has been certainly a very important topic in the industry. We've seen the big manufacturers take a lot of price in the past few years. You were just talking about your price range. Talk about how you determine price and what kind of margins you're trying to take here. So you have two ways to make the sausage, as we say, in the industry. It's the same if you buy a bicycle, for example. You have the retail and the direct model. I think many collectors know this. Berneron SR falls in the category of direct to consumer. So we are a B2C business. We use a B2C business model.

1:49:15We sell directly to the collectors for two reasons. First, I do not have enough stock to possibly supply any retail points. And second, I'm not saying no. Maybe in the future we will partner with some people to sell some of our watches. Not now. We need to consolidate a base. Retail, you mean? Because I truly do value retail. I'm not one of these guys who say, oh, you know, let's screw the intermediate. I think that's a bit naive. But as a result, because we are direct to consumer now, we are able to operate on a leverage of three, so a coefficient of three. So if my watch is sold for$3 ,000, it costs me$1 ,000 to produce.

1:50:07That's mainly because another$1 ,000 goes, I split it very roughly. It costs one to build, one to pay the salaries, operate the structure, etc., and another one to do the oxygen supply for the company to keep rolling further. So unlike people think a coefficient of three is far. And I'd like to debunk some of these myths. I hear some keyboard heroes sometimes who tell me, oh, if the watch costs a thousand to make, you could anything above 1.5 is greed. I'm like, yeah, right. You certainly never had built even a slight assumption business plan in your life to say stuff like this. Mister, I know everything.

1:50:51Good luck making a watch that has a cog. So a cost of making of a thousand and sell it 1.5. You'll go under in six months. Impossible. So and God knows the coefficient of three is from my knowledge in the industry, the bottom bracket of what can be achieved if you go under three

1:51:16your margin basically if you go under three my assumption is that either you will heavily diminish your capabilities of handling any bad buzz that could happen any bad event after sales lack of supply whatever or you will heavily damage the capabilities of your companies to move forward develop new projects, invest into people, furniture, etc. So it might be good to break the egg and start, but if your company doesn't have oxygen to grow, you'll end up circling where you are on the same floor and your company will effectively die because the other will progress. That's also the thing. When I say keep the narrative, that's what I mean.

1:51:59The biggest enemy in modern Hindi watchmaking, in my opinion, is the lack of narrative. Too many guys come out of the bushes with one watch that took them 15 years to make. They amaze everybody. You blow everybody's mind because you stacked all your ideas into one thing. But chapter two is not there, hasn't been thought about, and is not planned in a not even close future. So you have this huge spike of interest, which usually put the business under extreme pressure to provide, to fulfill the orders, etc. To the point where it distracts them completely from where do I go next. You end up, you know, like you with your completely focused at the bench fulfilling these orders and that kills any potential for your company to turn into a brand or to have any potential long future.

1:52:52And sometimes even your best collectors can turn into not enemies, it's not the world, but with loving so much what you do now, they could prevent you from going further. And I've had this discussion with my Cantier Manual this year. Some of our biggest advocates told me, ah, Sylvain de Cantier, why do you make a round watch now? And I was like, well, because I don't want to be boxed in the asymmetric Mirage layout forever. I want to build for you a stable brand which needs, by definition, multiple pillars to stand on. And I remember I told Roy this, I was like, trust me, that maybe in 10 years, you'll, your taste will change and maybe you'll move out of the Mirage connections that you have so deeply now, and you'll happily revert back to a Quentin Emmanuel or Fiasco, or I don't know, and then we'll still have that meaningful collection together.

1:53:49I told him my words, you'll see. Because me as a collector, my taste have changed dramatically over the years, which

1:53:56Sylvain Berneron:is the pleasure of the hobby as well, right? Indeed, indeed. And, you know, you've obviously, though, you are in the price bracket that you're in, and it is, you know, getting larger as you create new product, more complicated product, different product, product with more stones. Do you think that you could create, with your experience, now your business experience, your design acumen, could you create a successful high-volume watch company with prices between 2 ,000 and 5 ,000 francs? Could you do that that would differentiate and stand out? Have you thought about this? Oh, yes. Oh, yes, I've thought about it.

1:54:45And I have a very precise answer for you. I know that I could provide a good recipe to make a mass market, very appealing watch that could resonate with modern culture and be accessible in mass to a volume tank of clients. But the only way to achieve it is to already own the manufacturing structure. I think, and I give you an example, I think Christopher Ward is really stretching their model to the max because they do not own the manufacturing structure. The only way you can go under this kind of prices, and it's been proven recently with the Moon Swatch exercise, is like the Swatch Group. When you own the factories from A to Z and you make the plastic injection, the dyes, the stones, the crowns, the pinions, the wheels, etc.

1:55:43etc and you can handle that through and through and then place the different levels of spending accordingly if you do not have that i personally wouldn't start and this is why for me it was not even don't get me wrong i'm very happy to do full precious exotic watches but even if i wanted to do a revolution in the sub-5000 segment, I possibly could not do it. Regardless how good my idea is, I guarantee you, I will come up with this design. Regardless of how good it is, people will tell me, oh, it costs five, that's a$3 ,000 watch. And the problem is, right now, this segment is being hammered heavily, in my opinion, that's my analysis on the problem, is because on one side, you have big corporations which are sitting on the manufacturing structures and they are scared to death because they have the cost infrastructure that goes with it.

1:56:48Because don't get me wrong, when you have 5 ,000 employees, the tooling, the lease, all the loans at the banks that goes with it, you don't want to mess it up, right? So you don't want Mr. Perneau coming telling you, oh let's build a triangle watch you know in millions of examples for the next year it would never happen and at the same time the creativity the the uh is completely has been pushed away from these companies you can no longer be creative in these big corporations because the the excel sheet is king and until these two are reunited it will never work if you ask me somebody mr hayek Junior or I don't know, I'm not here to make calls, Mr.

1:57:33Rupert, they have to reunite the creativity with the manufacturer. Only when the two are together, it works. Proof of that. Moon Swatch was the most recent example. So you see, when you reunite the two, it was a creative idea. I'm not a big fan of, because I think it's product dilution, if you ask me, in a sense but nonetheless here is a true example of what happens when you reconnect the dots boom people are queuing to buy a watch in the 21st century which is elias because everybody has a phone yeah so it is of course possible but somebody has to have the balls and to say yes sorry i will put at risk my three four five hundred million manufacturing infrastructure i would put it up to the stress test to build that product that I believe in.

1:58:29And if you're a big entrepreneur, you have to take the big ball's risk that goes with it. Exactly. So this is the way I see it. But yeah, so me with my own need, my own resources, that segment is strictly unaccessible to me, I believe.

1:58:51Sylvain Berneron:Yep. No, it makes sense indeed. You need that manufacturing capacity to do it. The last thing to wrap it up, because it's great. Is there anything, you know, on the business side, you know, you think with Bernadon, you want to talk, you know, essay that you think is important to understand about what you're doing here? And is there anything that starting a watch brand, taking all this risk, that you would advice or information that you would give to, whether it be people in any other business or in watchmaking, etc., that you would give to them based on your experience so far? So it's been almost five years.

1:59:40I've almost cried multiple times, delayed holidays, delayed paychecks, delayed all of that. What I can say is I never regretted it. And even if he would fail next year or the year after, I still would be happy that I tried. I should also mention this because he can be very rough, look very rough sometimes, but the pride and the joy of saying, I gave it a go. And I always relate to this. I've been racing motorcycles with my dad for 20 years as an amateur. When you try your hardest and you still get smoked on the track, you have no regrets. You don't even feel bad because you remember that on that time you tried all you had.

2:00:26You left it all on the racetrack and it didn't work and that's fine. So my one and only advice to people is if you give it a go, give it your best shot. Like do not half-ass it in some way, like trying to be safe. That's the worst thing. I tried my mirage. People called me silly. I made the full gold construction, the movement from the ground up, even the spring bars in gold, which is the thing that people make the most fun of right now, even my best friends. That was for me the way to say, look, even that has been dialed into the max. So if it fails, I cannot think of a single point of the equation where I could have done more.

2:01:15Because the worst is that, is because it happened to me during races. What if you fail, you don't get the result you wanted to have, and your minds are thinking, ah, but you missed one training on Wednesday. Or you partied on Friday, remember, and you woke up at 11 instead of 8, like you said you were doing. If you had done these two things, maybe you would have had the result you wanted. That sucks. That's very bad because your brain will tell you. And whether you want to hear it or not, you know it's there and you're going to have.

2:01:48Sylvain Berneron:So no regrets. Yeah, you have to give it your own. Yeah, if you do it truly, pack your bag, ready to embark on that journey with your best intentions, a deep sense of responsibility and commitment and promise yourself that you will give it your hardest so that if you fail and do not hide that probability. During the entire process, I was well aware that I could probably lose a million three francs, which is all the money that I saved. And I had dark times in the process. I was still looking at that devil, yeah? saying, okay, this is there, I will keep on my path, trying not to collide with that scenario, but at least I'm acknowledging the fact that it potentially exists.

2:02:38It's the same way why I control my growth, right? Because I don't want to end up in an after-says nightmare.

2:02:43Sylvain Berneron:Yeah, exactly. But I mean, it plays into the desirability of the product as well. I mean, it's somewhat a virtuous situation. by indeed the temptation to produce 5 ,000 Mirages must be strong. Especially because you do make the calculation. When you see the emails, you go like, wait a minute, I have 500 people on the wait list. Let's imagine I built half of that 250, that's time five. You take your iPhone, you make the quick annual revenue of the brand this year, Times family go like, ooh, that's not bad, is it? Yeah, it would be short sighted, it would be unnecessarily risky, which that business is always already is.

2:03:36Again, between being brave, but not stupid. This is the conclusion.

2:03:41Sylvain Berneron:Absolutely. We'll leave it there. Yes, it's a very good one.

2:04:13Sylvain Berneron:weeks with a fresh episode of the business of watches until then i'm andy hoffman and i'll see you on hodinky.com

2:04:44Thank you.